Nightmare unfolding in Cyprus, as plan hatched to seize 25% of large bank deposits

CYPRUS – Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank, as it races to raise the funds for a bailout from the European Union and to avert financial collapse. Finance Minister Michael Sarris said “significant progress” had been made in talks in Nicosia with officials from the European Union, European Central Bank and International Monetary Fund. He confirmed discussions were centered on a possible levy of around 25 percent on holdings of over 100,000 euros (about $130,000) at Bank of Cyprus, and expressed hope that a package could be ready by the end of the day for approval by parliament. Cyprus faces a Monday deadline to clinch a bailout deal with the EU or the European Central Bank says it will cut off emergency cash to the island’s over-sized and stricken banks, spelling certain collapse and a potential exit from Europe’s single currency. Amid signs of momentum, Cypriot and EU officials said Cypriot President Nicos Anastasiades was expected in Brussels on Sunday to meet EU leaders including Council President Herman Van Rompuy and Commission President Jose-Manuel Barroso, as well as IMF Managing Director Christine Lagarde and the head of the ECB, Mario Draghi. Protesters in Cyprus gather outside parliament as government officials try to strike a bailout deal with the European Union. NBCNews.com’s Dara Brown reports. Van Rompuy and Barroso canceled a planned EU-Japan summit in Tokyo to tend to the Cyprus saga and euro zone officials told Reuters that the bloc’s 17 finance ministers would meet on Sunday afternoon. “Significant progress has been made in the direction of getting a deal, at least at the troika level,” Sarris told reporters. He said a number of issues were still outstanding, but that a package could be ready “late this afternoon or early evening” for approval by parliament. Arriving at the troika talks, Andreas Artemi, chairman of Bank of Cyprus, was asked if a 25 percent haircut was being considered on uninsured deposits. He replied: “I don’t know that yet.”